CYPRUS: Halloumi under pressure to satisfy Chinese demand

22 November, 2018

While halloumi exports are expected to hit record numbers this year, the Ministry of Agriculture has signed a protocol with China paving the way for the famous Cyprus white cheese to wow the huge Chinese market.

However, the outlook is blurry as producers feel that the industry may not be in a position to meet demand, feeling that pressure over the way the cheese is described in the Protected Designation of Origin (PDO) File may hamper growth.

Halloumi exports are closing in on EUR 200 mln, recording, as of October 2018, a 15% increase compared to the whole of 2017 when the dairy industry had exported 23,000 tonnes, worth EUR 156 mln.

If dairy producers’ expectations are met, then 2018 will see exports of the squeaky cheese double since 2015 when EUR 103 worth of halloumi was exported.

Although excited over the prospects of halloumi entering a huge market such as China, dairy producers fear that milk production, and especially that of goats’, will not suffice for the production of the traditional cheese.

The protocol is expected to significantly increase the exports of Cyprus’ flagship dairy product, as producers can directly send their halloumi to China by removing red tape.

“Halloumi producers will be able to export their products without needing a health certificate issued for each patch,” explained a Ministry of Agriculture official.

Agricultural Official, Sokratis Sokratous, said the protocol came about after initiatives taken by Cypriot and Chinese businessmen, with the Ministry intervening to facilitate the trade with China.

Halloumi is already present in the Chinese market, but the protocol will bolster efforts.

“Just recently an agreement between a local producer and a Chinese company regarding the export of dairy products worth EUR 2.5 mln was signed, with halloumi being the main item on the list”.

Sokratous said that the protocol with China describes the product and designates the sanitary conditions for the production of halloumi.

“The Chinese authorities were concerned over hygiene measures taken at the factories. After inspecting five production units, they have approved them for exports. Another 8 are to be inspected soon,” he said.

“The protocol puts strict guidelines. If you don’t comply then the protocol is void. If there are any traces of milk powder, they stop imports the day after.”

The officials said that Agriculture Minister Costas Kadis has asked for the Chinese authorities to speed up the inspection processes.

Dairy producers unsure

Andreas Andreou, General Secretary of the Dairy Producers told the Financial Mirror, that the association is excited over the prospects but are deeply concerned they may not be able to meet new demand as they are already faced with a shortage of milk.

He added that things are tight as it is, with high demand from European markets such as the UK, Sweden and Germany, while demand from countries such as Australia, with big Cypriot communities, are growing rapidly.

“Exports of cheese products to the UK alone for the first 8 months have seen an increase of 15% compared to the same period last year, reaching EUR 142 mln. Halloumi accounts for more than half of UK cheese exports,” said Andreou.

“We are excited to see the Chinese market being added to our list. And let’s face it, who doesn’t feel optimistic about the future of halloumi, knowing that it is served for breakfast at Hong Kong’s hotels? But this poses its challenges, as we are short of milk, especially goat and sheep milk.”

Andreou said efforts are underway, both from authorities and farmers to deal with a possible shortage. But the association feels that efforts are being undermined by the description of the product’s ingredients, submitted to the European Commission as a PDO.

The sticking point is the ratio between cow’s milk and goat and/or sheep’s milk included in the description of halloumi filed with the EU.

Currently, producers make halloumi with a ratio of 80%-20% of cow’s to goat or sheep’s milk, while the description of the file says that halloumi should be produced with a minimum of 51% goat or sheep’s milk as of 2024.

“Such a ratio would spell disaster for the industry as there is not enough goat or sheep’s milk being produced, nor is there enough livestock to produce the milk needed,” said Andreou.

And conditions have radically changed since the file was submitted in July 2015. “At that time, we were exporting only EUR 20-30 mln worth of halloumi”.

There is also the taste of the cheese to consider.

“Goat’s milk is an acquired taste, changing the ratio overnight in 2024, will not go down well with customers around the globe, from different cultures with different taste buds,” Andreou said.

Producers are asking from the state to think of ways to either gradually change the ratio or to consider revoking the PDO file and instead filing a Protected Geographical Indication (PGI) file.

The difference between the two is that qualities and properties of PDO products are exclusively determined by the geographical environment, while the main factor for PGI products is a certain quality of feature that is attributable to its geographical origin.

Echoing the same concerns, Giorgos Petrou, CEO and founder of Alambra Dairy Products said that the PDO excludes all halloumi byproducts which are at least 40% of halloumi exports.

“These exports would be lost overnight if the PDO description is applied,” Petrou said.

“Out of some 23,000 tonnes of halloumi exported in 2017, only 10,000 would have left the country’s ports.”

Petrou argued that: “Halloumi is a pillar of the rural economy and helps sustain life in our agricultural areas. More than 6,500 families depend on the halloumi industry, as the raw materials come from the agricultural sector.”

Acknowledging the limits of milk production, especially that of goat and sheep, the Ministry of Agriculture, said that it is doing everything in its power to ensure that farmers and dairy producers will be able to meet demand for halloumi.

“The ministry acknowledges that there are limitations as to how much goats milk can be produced by the island’s livestock. That is why we are looking into finding ways to increase the goat and sheep population by importing livestock and to increase their productivity,” said Sokratous.

Due to the financial crisis, the goat and sheep population had dropped from 470,000 in 2011 to 370,000 in 2014 and is now at 402,000.

Using various methods Cyprus has succeeded in increasing animal productivity by 4%, the ministry is also part of a project which aims to increase goat and sheep milk through genetic improvements.

The EUR 30 mln AGRICYGEN project - a consortium of 7 organisations from 4 different countries (Cyprus, UK, France, Germany) supports the advancement and sustainability of the livestock and feed production sector.

The PDO file is now before the College of Commissioners where it will undergo technical examination.

“The ministry has done everything in its power to complete the file,” said Sokratous.

It is currently stuck due to a political issue arising from the Green Line regulations and a dispute with the Turkish Cypriot side over how halloumi is made in the north.